Canada: COVID-19: Federal Government Announces Further Details On Wage Subsidy Program

We recently advised you here about the initial details regarding the Canada Emergency Wage Subsidy. The federal government has since announced further details surrounding the program.

The subsidy will be available to employers for three months. Businesses will have to apply monthly and in order to qualify, demonstrate that their revenues dropped at least 30% in the relevant month this year over the same month in 2019. For example, to be eligible for the subsidy for April wages, a business's revenues in April 2020 must be at least 30% lower than they were in April 2019.

There may be exceptions to this requirement for newer businesses. There will also be some "flexibility" on the revenue comparisons for businesses that did not exist in March 2019.

As we previously advised you, the maximum amount of the 75% subsidy per employee will be $847 per week (around $58,000 per year). Although Prime Minister Trudeau said, "Employers will need to attest that they’re doing everything they can to pay the remaining 25% of peoples wages", this top up does not appear to be required where an employer is unable to afford it. We note that, practically speaking, the amounts required to make employees who are earning more than $58,000 per year whole in terms of their wages could be significantly more than the 25% that the government is asking employers to pay.

The subsidy will be administered by the Canada Revenue Agency through the "My Business Account" portal on its website. The government is encouraging businesses to set up direct deposit to avoid delay in receiving the subsidy funds, which the government expects will start being distributed in three to six weeks.

Penalties for abusing the program could include fines and imprisonment.

The 10% wage subsidy for small businesses that the government also announced in March will continue to be available and will not require businesses show a drop in revenues. If a business qualifies for both wage subsidy programs, the amounts it receives for the 75% CEWS will be adjusted downwards to account for any amounts received on account of the 10% program.

The maximum amount available under the 10% program is $1,375 per employee and $25,000 per employer.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.